Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
983757 | Regional Science and Urban Economics | 2012 | 16 Pages |
Models of limited dependent variables are of great interest in econometrics. This paper focuses on the specification and hypothesis test of spatial models which have a Tobit structure. We derive an extended central limit theorem for statistics of a linear–quadratic form with multivariate random variables. We consider the LM statistics for testing spatial correlation and establish their asymptotic distributions. The tests are applied to an empirical example: we detect the presence of competition among school districts on school district income tax in Iowa.
► We derive five LM tests for spatial models with limited dependent variables. ► The asymptotic distribution of the LM statistic is based on an extended CLT. ► We use Monte Carlo studies to investigate finite sample properties of the tests. ► The tests indicate the existence of tax competition among Iowa school districts.